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January 3, 1999, Sunday
Magazine Desk
THE BIG CITY; Optimism by The Numbers
By John Tierney
The most fruitful telephone call of my reporting career took place in 1985 when I was preparing to go to Kenya for an article on the population crisis. I had heard about an economist named Julian Simon with unusual views on the subject, so I phoned him. I was reciting Kenya's hopeless statistics -- eight children in the average family, a population that would double in just 17 years -- when Simon interrupted.
''Yes,'' he said, ''isn't it wonderful that so many people can be alive in that country today?''
There was a long silence on my end, which was a response that Simon knew well. Nobody else challenged conventional wisdom so diligently, whether the topic was population growth, the energy crisis, ecological disasters or the sensible way to deal with overbooked airplanes.
Airplane overbooking was one of his first battles, minor but a model of his style. It took place in the 1970's, when airlines were allowed to bump anyone as long as they paid the passenger a standard bonus set by the Federal Government. Simon, ever suspicious of authority, was appalled to hear that airlines typically bumped the passengers who seemed most powerless and who were the least likely to make a scene, like foreigners, elderly ladies and young servicemen. At the time, Ralph Nader and other ''consumer advocates'' were proposing to solve the problem with more governmental regulation, but Simon knew that as a result there would be empty seats and therefore higher fares. He proposed a free-market alternative: pay people to get off voluntarily, with the bonus set not by the Government but by an auction in which the airline paid whatever it took to entice enough volunteers. His system, besides preventing any passengers from being involuntarily bumped, would save the airlines money. Everyone would come out ahead.
As usual, though, the first response he got was silence, from both Government bureaucrats and airline executives. The few people involved who even bothered to consider his plan said it was impractical. How would the airlines administer the auction? What if the passengers organized themselves into a cartel and refused to accept any reasonable bid? Simon tried to enlist support from Milton Friedman, but even that great missionary of the free market demurred. As sensible as the plan sounded to economists, Friedman told Simon that if the airlines were refusing to try it, there must be some flaw. ''I have no reason to question your results,'' Friedman wrote to Simon. ''Yet I find it even harder to believe that opportunities for large increments of profit are being rejected for wholly irrational reasons.''
It wasn't until another economist, Alfred E. Kahn, became head of the Civil Aeronautics Board in the Carter Administration that Simon's scheme was even tested. It quickly became standard practice in the industry, and Milton Friedman became one of Simon's biggest fans.
He wrote the introduction to the latest edition of Simon's 1981 book, ''The Ultimate Resource,'' extolling human ingenuity and technology.
I picked up a copy right after that first baffling phone call, and ever since the world has seemed a much cheerier place. Simon proclaimed that the growing human population would never run out of resources or ways to improve life and the environment. As his charts and prose demonstrated, doomsayers for thousands of years have long warned of too many humans and too few resources, but somehow, for all the urgent pessimism, the resources have never run out. Even as they have grown more numerous, humans have kept getting healthier, wealthier and wiser.
Simon's optimism didn't sell as well as Malthusian tracts like ''The Population Bomb,'' by the ecologist Paul Ehrlich. But Simon's work helped shape public policy and academic discourse, and he did score one propaganda victory. In 1980, when Ehrlich was predicting a new ''Age of Scarcity,'' Simon bet him that any resource Ehrlich cared to name would be cheaper at any date in the future. Ehrlich, together with two fellow Malthusians, chose quantities of five metals (chrome, copper, nickel, tin and tungsten) worth a total of $1,000 and bet that they would cost more a decade later.
By 1990, the value of the metals had plummeted by $567.07, which Ehrlich's side had to pay to Simon. After the result was reported in this magazine, the bet was featured in newspapers, magazines, television programs and textbooks around the world. Simon joked that his epitaph would be, ''He gambled.''
Simon could never persuade Ehrlich or any prominent Malthusians to take another bet, but he did place a small one with me. I'd noticed that two of the three losing bettors, Ehrlich and John P. Holdren, then a professor at the University of California at Berkeley, had previously won ''genius award'' fellowships from the MacArthur Foundation. ''The foundation spent more than half a million dollars backing the nongenius side of this bet,'' I told Simon. ''They must be embarrassed. Now they'll have to give you a MacArthur.''
Simon laughed. ''The only thing I'm going to get is a McDonald's,'' and he bet me a hamburger that he would never win a MacArthur. During the 1990's, just as Simon predicted, the prices of metals, food, energy and other natural resources went right on falling. And also just as he predicted, the MacArthur Foundation went right on ignoring him, preferring to give more money to Malthusian ecologists with track records like Ehrlich's. By the time of his death by heart attack last February, he had won no MacArthur. I owe him a hamburger, and much more, and I'm not sure how to pay up except to propose a different epitaph: ''He was right.''
